Accounting Concepts Quiz

If a firm believes that some of its debtors may "default" on their payments, it should act on this by making sure that all possible losses are recorded in the books. This is an example of the ______________________ concept in operation.

• Entity

• Prudence

• Going concern

• materiality

The _________________ concept means the fact that a business is separate from its owners.

• realisation

• entity

• going concern

The fact that everything a firm owns, it also owes out to somebody in the form of liability or equity i.e Total Assets = Total Liabilities + Capital. This relationship is explained by the ______________________________ concept.

• Going concern

• Realisation

• Double entry

• Accruals

Because of the ______________________ concept, when an office manager purchases office supplies, he or she does not account for the use of each paperclip or staple.

• prudence

• materiality

• money measurement

The ______________________ concept states that if one method of accounting for depreciation is used one year, then the same method should also be used the following year.

• prudence

• money measurement

• consistency

• double entry

The fact that a big customer has promised to place a big order at the end of the year cannot be recorded under the ______________________ concept.

• realisation

• prudence

• money measurement

• objectivity

Even if a business experiences a loss for three years in a row, the ______________________________ concept tells us to assume the business will continue operations regardless.

• prudence

• consistency

• going concern

The calculation of profits is based on expenses incurred during the period rather than simply those actually paid for. This statement describes the ______________________ concept.

• consistency

• accruals(matching)

• prudence

• realisation

If the management of "Dunces, Corp" are less than competent, the accountants cannot record this information in the financial statements. The concept that supports this practice is the _____________________________ concept.

• Realisation

• Money measurement

• Going concern

• Prudence

 The different procedures and policies which state how items can be dealt with in the financial statements of the organisation e.g depreciation

• Accounting base

• Accounting policy